Russia's grain crop has beaten official expectations – but its exports will fall short, thanks to "tense competition" for shrinking import demand, the country's biggest listed agribusiness group said.
Razgulay said that Russia harvested 96m tonnes of grain this year, 3m tonnes more than the latest estimate from the country's notoriously pessimistic farm ministry
However, the group underbid the ministry by 1m tonnes on exports, pegging them at 18m tonnes, reflecting tough competition with the US and European Union as well as good harvests in traditional wheat importers.
The 20% decline in exports compared with last year, when Russia harvested a bumper 108m tonnes of grain, would be reflected in a rise in inventories to 18.8m tonnes by the end of the 2009-10 marketing season – treble those of two years before.
Into the red
The forecasts, which follow growing warnings from Europe and the US of Russia's competitiveness in grain exports, came as Razgulay revealed details of the financial picture behind its default in April and May on redeeming more than 4bn roubles in bonds.
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Russian grain dynamics, 2009-10 (year-on-year change)
Production: 96.0m tonnes (-11.1%)
Domestic consumption: 76.2m tonnes (+1.2%)
Exports: 18m tonnes (-19.6%)
Year end stocks: 18.8m tonnes (+8.7%)
Source: Razgulay |
The group's results for January to June revealed an 86% jump in grain sales, by weight, with the sugar business – Russia's largest beet producer - enjoying a 35% jump to 21,600 roubles per tonne in sugar prices.
However a slide in grain prices of 44% on the domestic market, coupled with the costs of distributing the extra crop, slashed operating profits by 89% to 277m roubles.
After factoring in extra finance costs, the group reported an after-tax loss of 986m roubles, compared with earnings of 1.00bn roubles in the same period in 2008.
Talks with creditors
Razgulay said it had agreed with bondholders to delay redemption on 3.5bn roubles of the unredeemed bonds until March-May next year, with a deal over a further 740m roubles of borrowings yet to be sealed.
It added that since June it had reaped record rice production, up 39% to 13,000 tonnes, with the grain harvest 10% higher at 569,000 tonnes and sugar beet production rising 8% to 1.45m tonnes.
Razgulay shares stood 0.2% higher at 45.10 roubles in afternoon trade in Moscow.
The shares topped 220 roubles in February last year, during the farm commodities boom.
Razgulay will hold an investor conference on Wednesday at 11.00 GMT.
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